The Tug-of-war Over Patent Rights Ownership Between Inventor And Employer

Who is the rightful and legal owner of an invention: The employee who invented it or his employer? The answer depends on the agreement between these parties although other factors are also considered.

For the inventors, the answer can mean the difference between being recognized – and possibly getting rich – for their inventions and being consigned as a mere cog in the machine. For the employers, it can also mean being recognized as a pioneer and leader in the field on one hand and being left behind by the competition on the other hand.

With such high stakes, which side does the law favor? Take note that patents are articulated under the U.S. Constitution (Article I, Section 8, Clause 8) and governed by the Patent Act.

Inventors Typically Have Patent Ownership

The general rule in the tug-of-war between inventors and employers: You, if you’re the inventor, own the patent rights to your invention created during the course of your employment. You can apply for a patent with the U.S. Patent and Trademark Office (USPTO); only a natural person, by the way, can apply for it and, thus, organizations cannot.

But there are exceptions to the general rule. You don’t own the patent rights under either of the following circumstances:

You signed an employment agreement with your employment wherein you assigned invention rights (the doctrine of pre-invention assignment); or

You were specifically hired either to create the specific invention or for your invention skills (the work-for-hire doctrine); said employment may or may not come with a written agreement.

In practice, either of these two exceptions to the rule nearly always applies. This means that the employers hold patent ownership to their employees’ inventions, a fact reinforced by the signed and notarized pre-invention assignment agreements at the time of the hiring. The assignment agreement typically comes as a bundle, so to speak, with other employment documents like confidentiality agreements.

Employers Can Have Shop Rights

Let’s assume that you retained patent ownership over your invention. Keep in mind that it isn’t an ironclad ownership either because your employer can still have shop rights. The term refers to the limited right of the employer to use your patent without paying you, either in cash or in kind.

Shop rights occur when you, the employee and inventor, uses your employer’s resources including the machinery, facility and network in creating your invention. The doctrine itself is flexible in its application in the real world but it typically allows your employee the use of your invention internally. Your employer can neither assign nor sell your invention to third parties; otherwise, it can be considered as infringement of patent.

If you’re an inventor seeking employment or already in employment, you are well-advised to consult with a patent lawyer about your employment contracts including the assignment agreement. You have to protect your inventions from infringement, even by your employers, if that’s what you want.